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Headed for a housing bubble?

By Judy Martel · Bankrate.com
Monday, July 8, 2013
Posted: 6 am ET

Soaring home prices, lack of inventory and bidding wars in parts of the country are prompting some analysts and investors to start using the B-word again: bubble.

Fears that prices are rising too far, too fast have led to predictions that the market won't be sustainable. "Prices in some areas are just out of control," Scott Tamkin with Keller Williams Realty in Los Angeles told CNBC. "As soon as a good property comes on the market at a reasonable price, bam! It's gone in multiple offers, oftentimes in cash," he said.

Rick Sharga, executive vice president at Carrington Mortgage Holdings in Santa Ana, Calif., reported similar experiences in a previous interview. In parts of California, he estimates, 70 percent of the homes sold have multiple bids.

In markets such as Phoenix, Las Vegas, Los Angeles and parts of Florida, where prices plummeted during the housing bust, a lack of inventory and high investor activity has driven up home prices as buyers compete for the few properties on the market.

Meanwhile, the party appears to be ending for housing stocks, hampered by expectations of rising mortgage interest rates. In June, the index that measures housing stocks marked the largest drop in a year. The major building companies, including DR Horton, Pulte, Lennar, and Ryland, all saw losses after performing well over the past year.

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26 Comments
Lex
September 04, 2013 at 3:54 pm

Yes, there's a housing bubble, but it's more than a little silly to write about it without also writing about the large number of foreclosed houses and underwater mortgages that the banks are still carrying on their books.

If all those properties were marked to market, we'd see a much more moderate rate of growth in housing prices. Of course, some of the banks would have to be liquidated, but we've been doing that in orderly fashion with the FDIC since 1933 and it would punish the bank officers and directors who got us into this mess, so, frankly, I have no problem with it.

Michelle
July 18, 2013 at 5:49 pm

I agree with @steved. My income has fallen as health insurance, retirement and the normal cost of living has gone up and no raise to balance it out. I have been competing with cash buyers/investors for a few years because I can't and won't break the bank just to lose something 6 months later.

steved
July 14, 2013 at 10:55 am

Well, speaking for myself and others like me, my income has remained relatively flat for a long time while expenses have been going up rather quickly. Unless one has a money tree, it is very dangerous to take on large debt in hopes things will get better financially in your future. Odds are they won't. It's best to buy only what you need and not a bit more. Also it's best to pay as little as possible.

RIcki
July 11, 2013 at 7:37 pm

I have been able to get my agent to return some of his fees on bigger purchases. It never hurts to ask them and sometimes it may take a little help from them to get the deal done.
Here in Arkansas the fee is anywhere from a flat fee to 10% of the sale price.
Most realtors will do 5% on sales that are over 300k
If the market is moving well you can generally sell the house by yourself if you actually spend enough time to evaluate what it is worth. If you are not savvy to doing that have interviews with several realtors to determine an asking price.

H@H
July 10, 2013 at 10:16 am

Realtors are salesman, the worst people to handle the the biggest investment of your life! They are commission compensated, this leads to conflicts of interest. I've yet to meet a person in real estate sales that would forgo a higher commission based on their clients best interest! It's a ho's business.........

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